The White House announced on Wednesday that President Joe Biden has reached an agreement with leaders in Los Angeles and union workers to ease supply chain disruptions by keeping the ports of Los Angeles open 24/7. The president will give a speech Wednesday afternoon discussing ongoing supply chain issues and highlighting how his administration is addressing these challenges.
The agreement should help clear up the massive trade bottleneck of stranded container ships sitting off the coast of California, which for weeks have been unable to unload their cargo due to COVID-19 outbreaks and worker shortages. The inability of these ships to offload the goods they are carrying has caused shortages and driven up retail prices for American consumers, contributing to the highest levels of inflation in 13 years.
Ports in Los Angeles and Long Beach, California, are points of entry for 40% of all shipping containers that reach the U.S., senior administration officials said. Increased demand for goods during the coronavirus pandemic has increased the number of import and export containers trafficked by the port of Los Angeles by a record 30% in the first six months of this year. The port in Long Beach has seen an increase of 23%.
But the ports have not had enough manpower to keep up with the increased volume of trade, preventing U.S. factories from receiving needed materials and American consumers from finding the goods they want to buy in stock.
In June, Biden created the Supply Chain Disruptions Task Force to study the issue and develop solutions. After working with officials from the Ports of Los Angeles and Long Beach and representatives of the International Longshore Warehouse Union, the White House announced a series of commitments to keep the port of Los Angeles open 24/7, which administration officials estimate will nearly double the hours that cargo will be able to move out of its docks, onto highways, and to its destinations in the U.S. The Long Beach port began operating 24/7 roughly three weeks ago.
The labor union and large companies each agreed to expand hours and pay overtime so that goods will be moved out of the port during nights and on weekends. Walmart, for example, committed to use more night shifts and estimated that the volume of goods moved by the company could increase by as much as 50% over the next few weeks.
Before Biden delivers his speech, he will hold a virtual teleconference with the heads of Walmart, FedEx Logistics, UPS, Target, Samsung Electronics North America, and The Home Depot, each of which has made similar commitments.
The White House said these six companies together will move over 3,500 additional containers overnight per week, delivering toys, appliances, furniture, and other goods Americans have purchased online as well as pieces and parts sent to U.S. factories for assembly into other products.
Though this agreement should provide some needed relief for the economy, the White House warned American consumers on Tuesday that they should expect to see higher prices and continuing shortages this holiday season as global supply chain disruptions remain unresolved.
Meanwhile, Republicans say that rising consumer prices are driven by reckless government spending. They’ve put the blame for inflation squarely on Biden’s $1.9 trillion coronavirus relief package, arguing that additional spending Democrats want in the $3.5 trillion reconciliation package will only worsen the economic hardship facing Americans.
“The Democrats’ inflation is so bad that even though the average American worker has gotten a multiple-percentage-point pay raise over the last year, their actual purchasing power has been cut,” said Senate Minority Leader Mitch McConnell on the Senate floor last week. “Even dollar stores are having to raise their prices. Just ask any American family about their last few trips to the supermarket, the gas station or the toy store. Heaven forbid if they’ve had to participate in the housing market or the auto market any time lately.”
White House officials argue inflation is “transitory” and that as more people get vaccinated against COVID-19, people will fully return to work, trade disruptions will be eased, and prices will come back down sometime in 2022.
U.S. consumer prices rose 5.4% in September, according to a report from the Labor Department, growing at the fastest pace seen in 13 years. Energy prices increased 1.3% last month and have now risen 24.8% over the past year. Additionally, food prices are up 4.6% from last year, with prices for meats, poultry, fish, and eggs climbing 10.5% and beef prices rising 17.6%.